Azure Reserved Instances - Step-by-Step Execution

Process Flow - Azure Reserved Instances

Start: Need VM

↓

Check VM usage predictability

↓

Buy Reserved

↓

Apply RI Discount

↓

VM runs with lower cost

↓

End

This flow shows deciding to buy an Azure Reserved Instance (RI) when VM usage is predictable, applying the discount, and running the VM at a lower cost.

Execution Sample

Azure

1. Predict VM usage for 1 year
2. Buy 1-year Reserved Instance
3. Deploy VM with RI applied
4. VM runs with discount
5. Monitor cost savings

This sequence shows buying and applying an Azure Reserved Instance to save costs on a virtual machine.

Process Table

Step	Action	Condition/Check	Result/Effect
1	Predict VM usage	Is usage steady for 1 year?	Yes, usage is steady
2	Buy Reserved Instance	Select VM size and term	Reserved Instance purchased for 1 year
3	Deploy VM	Apply RI discount automatically	VM runs with RI discount
4	VM runs	Billing applies RI rate	Cost is lower than pay-as-you-go
5	Monitor cost	Check billing reports	Savings confirmed
6	End	Term ends or usage changes	Decide to renew or switch pricing

💡 Process ends when RI term expires or usage pattern changes

Status Tracker

Variable	Start	After Step 2	After Step 3	After Step 4	Final
VM Usage Predictability	Unknown	Confirmed steady	Confirmed steady	Confirmed steady	Confirmed steady
Reserved Instance Purchased	No	Yes	Yes	Yes	Yes
VM Running Cost	Pay-As-You-Go rate	Pay-As-You-Go rate	RI discounted rate	RI discounted rate	RI discounted rate
Cost Savings	0	0	Applied	Confirmed	Confirmed

Key Moments - 3 Insights

Why do we check VM usage predictability before buying a Reserved Instance?

Because Reserved Instances save money only if the VM runs steadily for the reserved term, as shown in execution_table step 1.

Does buying a Reserved Instance immediately reduce VM cost?

No, the discount applies only when the VM is deployed and matches the RI, as shown in execution_table step 3.

What happens when the Reserved Instance term ends or usage changes?

You must decide to renew or switch to pay-as-you-go pricing, as shown in execution_table step 6.

Visual Quiz - 3 Questions

Look at the execution_table, at which step is the Reserved Instance actually purchased?

A Step 1

B Step 3

C Step 2

D Step 4

💡 Hint

Check the 'Action' column for when the Reserved Instance is bought.

According to variable_tracker, what is the VM Running Cost after Step 3?

A RI discounted rate

B Zero cost

C Pay-As-You-Go rate

D Unknown

💡 Hint

Look at the 'VM Running Cost' row under 'After Step 3' column.

If VM usage is not steady, what does the concept_flow suggest you should do?

A Buy Reserved Instance anyway

B Use Pay-As-You-Go pricing

C Stop using VM

D Buy multiple Reserved Instances

💡 Hint

Refer to the decision branch in concept_flow after checking usage predictability.

Concept Snapshot

Azure Reserved Instances (RI) let you save money by pre-paying for VM usage.
Check if your VM usage is steady for 1 or 3 years.
Buy an RI matching your VM size and region.
Deploy VM to automatically get discounted rates.
Monitor billing to confirm savings.
Renew or switch pricing when RI term ends.

Full Transcript

Azure Reserved Instances help reduce costs by committing to use a virtual machine for a set time, usually 1 or 3 years. First, you check if your VM usage is steady and predictable. If yes, you buy a Reserved Instance for that VM size and term. When you deploy the VM, Azure applies the RI discount automatically, lowering your running costs compared to pay-as-you-go pricing. You monitor your billing to see the savings. When the RI term ends or your usage changes, you decide whether to renew the RI or switch back to pay-as-you-go pricing.

Practice

1. What is the main benefit of using Azure Reserved Instances?

easy

A. Automatically scale virtual machines up and down

B. Save money by pre-paying for virtual machines

C. Create virtual machines without any cost

D. Backup virtual machines to Azure Storage

Solution

1. Step 1: Understand the purpose of Azure Reserved Instances

   Azure Reserved Instances allow you to pre-pay for virtual machines to get a discount compared to pay-as-you-go pricing.

2. Step 2: Compare options with this purpose

   Only Save money by pre-paying for virtual machines mentions saving money by pre-paying, which matches the main benefit.

3. Final Answer:

   Save money by pre-paying for virtual machines -> Option B

4. Quick Check:

   Reserved Instances = Pre-pay savings [OK]

Hint: Reserved Instances = pre-pay to save money [OK]

Common Mistakes:

• Confusing Reserved Instances with auto-scaling
• Thinking Reserved Instances are free
• Mixing backup features with Reserved Instances

2. Which Azure CLI command is used to purchase a Reserved Instance?

easy

A. az vm create

B. az vm start

C. az storage account create

D. az reservations reservation-order create

Solution

1. Step 1: Identify the CLI command for Reserved Instances

   The Azure CLI command to purchase Reserved Instances is under the 'az reservations' group, specifically 'reservation-order create'.

2. Step 2: Eliminate unrelated commands

   Commands like 'az vm create' create virtual machines, not reservations. 'az vm start' starts VMs, and 'az storage account create' creates storage accounts.

3. Final Answer:

   az reservations reservation-order create -> Option D

4. Quick Check:

   Purchase Reserved Instance = az reservations reservation-order create [OK]

Hint: Reservations commands start with az reservations [OK]

Common Mistakes:

• Using VM creation commands to buy reservations
• Confusing storage commands with reservations
• Trying to start VMs to create reservations

3. Given this Azure CLI command output snippet after buying a Reserved Instance:

{
  "id": "/subscriptions/123/resourceGroups/myRG/providers/Microsoft.Capacity/reservationOrders/abc123",
  "properties": {
    "term": "P1Y",
    "appliedScopeType": "Shared",
    "skuName": "Standard_D2s_v3"
  }
}

What does the "term": "P1Y" mean?

medium

A. The reservation lasts for 1 year

B. The reservation is for 1 month

C. The reservation is for 1 day

D. The reservation is permanent

Solution

1. Step 1: Interpret the term format

   The term 'P1Y' follows ISO 8601 duration format, where 'P' means period and '1Y' means 1 year.

2. Step 2: Match the term to options

   Only The reservation lasts for 1 year correctly states the reservation lasts for 1 year.

3. Final Answer:

   The reservation lasts for 1 year -> Option A

4. Quick Check:

   Term P1Y = 1 year reservation [OK]

Hint: P1Y means period of 1 year in ISO duration [OK]

Common Mistakes:

• Thinking P1Y means 1 month or 1 day
• Assuming term means permanent
• Ignoring ISO 8601 duration format

4. You tried to purchase a Reserved Instance but received an error: "Invalid scope type". What is the likely cause?

medium

A. You specified an unsupported scope type for the reservation

B. You forgot to specify the VM size

C. You used the wrong Azure CLI command

D. Your subscription has no active VMs

Solution

1. Step 1: Understand the error message

   The error 'Invalid scope type' means the scope type parameter for the reservation is not valid or supported.

2. Step 2: Analyze other options

   Missing VM size or wrong CLI command would cause different errors. Having no active VMs does not cause this error.

3. Final Answer:

   You specified an unsupported scope type for the reservation -> Option A

4. Quick Check:

   Invalid scope type error = wrong scope parameter [OK]

Hint: Check scope type parameter when 'Invalid scope type' error appears [OK]

Common Mistakes:

• Assuming missing VM size causes this error
• Using wrong CLI command without checking scope
• Thinking no active VMs cause scope errors

5. You have a steady workload running 4 Standard_D2s_v3 VMs continuously. You want to save costs using Azure Reserved Instances. Which approach is best?

hard

A. Purchase 4 Reserved Instances for different VM sizes

B. Purchase 1 three-year Reserved Instance for Standard_D2s_v3 VM

C. Purchase 4 one-year Reserved Instances for Standard_D2s_v3 VMs

D. Use pay-as-you-go pricing and scale VMs manually

Solution

1. Step 1: Match workload to reservation quantity and term

   You have 4 steady VMs of the same size. Buying 4 Reserved Instances matching the VM size and quantity saves costs.

2. Step 2: Choose appropriate term length

   One-year term is common for steady workloads. Three-year is longer commitment but not required here. Different VM sizes do not match your workload.

3. Final Answer:

   Purchase 4 one-year Reserved Instances for Standard_D2s_v3 VMs -> Option C

4. Quick Check:

   Match VM count and size with Reserved Instances [OK]

Hint: Match Reserved Instances count and size to steady VMs [OK]

Common Mistakes:

• Buying fewer Reserved Instances than VMs
• Choosing wrong VM sizes for reservations
• Ignoring steady workload benefits